Besides federal taxes, we must pay state and local taxes depending on where we live. Like federal taxes, in order to file state taxes on our income, it is necessary to fill out a form (in addition to paying). The Oregon Form 40 (OR-40) is the form that full-year residents of this state must fill out. In the case of part-time residents, they must fill out forms OR-40-P or OR-50-N.
State taxes often adopt federal tax regulations which make filing taxes a lot easier. You can even use the information you wrote on your federal return when you fill out the state form.
If you want to learn more about the Oregon Form 140, you have found the perfect article.
Oregon Income Taxes
To file your Oregon Form 40, it is essential that you first know the regulations regarding income taxes in this state, since this form is the one to do this type of tax return.
First and foremost, you need to know that they have almost the same regulations as federal taxes since the Oregon tax system relies on the IRS structure. So, understanding this state tax system is not as complicated as you may think it is.
This type of tax dates from 1930, with being Oregon one of the first states to establish it. This system establishes tax rates ranging from 4.75% to 9.9%, distributed in four thresholds or levels according to income. The maximum rate is one of the highest in the country but very few residents have to pay it since it is for people who generate approximately $ 125,000.00 per year or $ 250,000.00 if they file a joint return (married couple).
In this image, you can see the income limits.
As we mentioned earlier, the Oregon tax system is very similar to the federal tax system, with some well-marked and important differences such as the additions and subtractions that you must make according to your specific circumstances.
Among the most common subtractions (this will change your state taxable income compared to your federal taxable income) we can mention social security benefits, interest, and dividends on government obligations (such as Treasury bills and saving bonds).
On the other hand, the additions you can include in your Oregon tax return are those related to interest on bonds issued by other state governments or income taxes paid in other states.
How do I file Oregon Form 40 (OR-40)?
Before starting, you must have filled out your federal return since almost all the information required for federal taxes will be needed in your state tax return. Additionally, you must include a copy of your federal return.
Click here to download the Oregon Form 40.
The first thing you should write is the ending date of your fiscal year. Next, you will see 7 boxes, which you will only have to mark if you meet any of these assumptions. In the case of the box “Calculated using“ as if ”federal return”, you may check it only if a) you are filing as a married person but filing separately from your spouse, b) you’re filing as a registered domestic partnership (RDP) (same-sex married couples), or c) you aren’t required to file a federal return.
In the following boxes, you may write your full name, address, date of birth, zip code, phone number, and your Social Security Number (SSN) or your Individual Taxpayer Identification Number (ITIN). Check the boxes only if you previously filed an Oregon return with a different SSN and on page 4 of the Oregon Form 4, in the “amended” statement, write your former SSN.
If you don’t qualify to get an SSN, write your ITIN. If you applied for it and haven’t gotten it, check the box “applied for ITIN”. You may also write your spouse’s information data (RDP couples receive the same treatment as married couples).
Then, it’s time to complete information related to your filing status, dependents, and exemptions. Check the box with your civil status (remember RDP couples receive the same treatment as married individuals, they mustn’t check the “single” box).
On exemptions boxes, only check the ones that fit you. On box 6.a, check “regular” if you are claiming exemptions for yourself; check “severely disabled” if you had a disability during your fiscal year (your doctor must write a letter describing your disability). If someone else is claiming you as a dependant, you may not check the other boxes but the “Check box if someone else can claim you as a dependent” box.
Do the same thing on your spouse’s boxes if any of the previously explained exemptions apply. Subsequently, write the identification data of your dependants (if you have) in order from youngest to oldest. You may check the box on the right side if one of your children has a disability (you must have their doctor’s statement describing their disability). From box 6.c to 6.e write the number of your dependents. In the next image, you may verify the dependent’s code.
The next step in filing your Oregon form 40 is writing the information related to your Oregon taxable income, deductions, and subtractions. On the “taxable income” boxes, write your income amounts. On “subtractions” boxes complete the corresponding data, according to the calculus you must make in accordance with your income. You can use this table for calculating your “federal tax liability” rate.
Next, it’s time for deductions. You may claim Oregon itemized deductions or standard deductions, but not both. You have to choose the larger one. For married individuals, there is something they should take into consideration. If a married couple is filing separately and one of them is claiming itemized deductions, the other must do the same. So, if your spouse claims itemized deductions and you don’t, your standard deduction will be 0. You may not use federal itemized deductions, instead, use your deductions from Schedule OR-A.
If you choose to claim standard deductions, it is worth noting they are based on your filing status.
The next lines on your Oregon Form 40 are the ones regarding Oregon Taxes and Standard Carryforward credits. On the form, you may see a little explanation for what you have to write. However, you may take a special look at the “political contribution credit” box. If you’re filing jointly and your adjusted gross income (AGI) exceeds $200,000.00, the credit won’t be allowed. The same happens with individual fillers whose AGI exceeds $100,000.00.
Almost finishing, on page 3 of your Oregon Form 40, you need to write your Payments and Refundable Credits (from line 30 to36) and your Tax or Refunds amounts (from line 37 to 49). You may estimate your income tax rate using this calculator.
On line 50, you may write whether you want a check or a direct deposit in case of refunds. You should contact your bank to ask for your routing and account number if you want the Oregon Department of Revenue to deposit the funds directly in your bank account. But if you decide to receive the money in an account outside the United States, you will receive a check.
Lastly, but one of the most important steps on filing your Oregon Form 40, is signing it. Don’t forget to include a copy of your federal return or your federal return or the Oregon Department of Revenue may disallow or adjust your deductions, subtractions, or additions.
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